How The Bank Of Palestine Bested Carlos Slim And Plans To Expand In Chile

The Palestinian diaspora is one of the largest and arguably most emotionally connected to its homeland in the world and that, to Hashim Shawa, looks like an opportunity.

There are 5 million registered Palestinian refugees eligible to receive services through the United Nations, and the diaspora is larger: an estimated 7 to 10 million, according to Shawa, chairman of the Bank of Palestine.

Shawa, who took over his family's bank at the age of 31 after the sudden death of his father in 2007, has his eyes set on that diaspora, which he estimates has about $100 billion in assets.

Hashim Shawa (Credit: Bank of Palestine)

Over the summer, he opened the bank's first branch outside Palestine, in Dubai's International Financial Center, and said the bank plans to open a branch in Chile in the first half of 2016.

"This is not only the first Palestinian bank in Chile, but the first Arab bank in Latin America, which puts us in a lead position to engage and promote investment both ways," he said. "No other Arab bank is really paying attention to that the way we can."

Why Chile? There is a population estimated at 400,000 - 500,000 of people with Palestinian roots (exact numbers are difficult to come by). They are descendants of settlers who left Palestine in the 1800s and explored Latin America.

"Some arrived in Brazil. They went to Boliva and Peru, along the Andes mountains. They went further south until they realized they can't get further south, and ended up settling in Peru," Shawa said.

Among the prominent business people in the community: Jose Said, whose company, Parque Arauco, owns shopping malls and is a Coca-Cola franchise holder; the Yurur family, prominent in textile manufacturing, and Albert Kassis, CEO of Cial Foods.

Shawa said Palestinian business people have been back and forth to Santiago for the past four or five years, building ties to the community. "It's really untapped potential," he said.

He hopes that once the branch is established, both it and the branch in Dubai will handle about $100 million in transactions each year, investments in Palestine from people in Dubai and Latin America, and investments in Latin America or Dubai from people in Palestine. For instance, Palestinian olive oil producers will be able to use the bank to establish a presence in Latin America.

On a side note, it's interesting the way that commerce can sometimes be the diplomatic lead. Palestine registered as a country under the regulatory authorities in Dubai, Shawa noted.

What about Carlos Slim?

The Palestinian community in Chile has a soccer club, the Palestino club, which plays on a Latin American cup level. "They're extremely successful." Shawa heard about the club, and wanted to see it in action.

"We went on a mission to get to know the community," he explained. "The club carries the Palestinian flag, the colors of Palestine."

The club's corporate sponsor was Telmex, partly owned by Carlos Slim, who is of Lebanese descent. Slim is usually first or second on the Forbes list of the world's wealthiest people.

"I asked, 'How come you have Telmex?'" Shawa said. "'You should have Bank of Palestine.'"

"I was joking, but they took it seriously. Before we knew it, they wanted us to give them an offer," he said.

The Bank ended up paying a quarter of the amount Telmex had been paying, but "we've been proud sponsors for the last five years," Shawa said. The shirts emblazoned with the Bank of Palestine name and a map of historic Palestine caused a small controversy.

As for the branch, it's on its way. Shawa said the bank has submitted a request for a license and hired a representative. He hopes the community in Chile will be more sanguine about the political risks of investing in Palestine and instead focus on some of the positives, such as the fact that there is no tax on dividends, no restriction on foreign investment, and that agriculture and real estate are seen as strong investments.

Kito de Boer, head of the Office of the Quartet, recently said that investors could expect 8-10% returns on investments in those sectors. He is building international support from development banks, multinational corporations and the diaspora to collectively raise about $150 million for projects such as solar-power generators and agri-processing facilities.

"It's a good place to put money and earn a good yield," Shawa said.

A business journalist for 20 years and a freelancer for more than 10 of that, I’ve written about tobacco farmers in Amish Country, immigrants in New York City and financiers all over the world. Right now, I'm writing about the business of guns.